As the annual retail pilgrimage to the Jacob Javits Center draws to a close, I started wondering if anything has changed since last year. As I met with Forrester’s retail clients during the show, it was clear that this is no longer just a brick-and-mortar show. The retailers I met with had all sent a delegation of cross-functional executives, including the CIO, COO, CMO, SVP of eCommerce, and head of store operations. These leaders are no longer working in organizational silos: they know that they need to find technology solutions that meet the needs of today’s digitally connected customer, not the needs of their legacy channel-centric business units. I was impressed at the way these retailers are embracing and executing on agile commerce.
On the expo floor, the same theme was abundantly clear. NRF has evolved to become a retail commerce show, not just a retail technology show. Joining the incumbent store systems and POS vendors were all the enterprise eCommerce solution providers, order management vendors, system integration firms, and digital agencies. Whereas last year was all about mobile, with hastily developed prototypes and lots of vaporware, this year the expo floor was a place more grounded in reality. Strategic relationships were abundant, with vendors realizing that customers are demanding integrated solution suites that go far beyond the scope of their own product portfolio. As I did my rounds of expo floor booth visits, executive briefings, and product demos, here’s what I found:
JC Penney’s CEO Ron Johnson is hedging his bets that among other innovations, in-store iPads and iPods will help make his new concept stores a hip place for customers to hang out. Ron is not alone in his mission; Macy's, Staples, Urban Outfitters, Home Depot, Wal-Mart, Target, Nordstrom, Neiman Marcus, Sephora, Clinique (the list goes on and on) are all in the process of piloting new in-store digital technologies.
However, “hip” is not a business case. In-store technologies must not only digitize existing experiences but, in doing so, must improve upon or completely re-invent them. As I see retail technology concepts like magic mirrors, virtual shelves, augmented reality displays, and touchscreen kiosks, I worry that retailers are getting swept away in the hysteria of the technology and are failing to articulate the value proposition that these technologies offer to the consumer.
Don’t get me wrong; many of these in-store digital experiences resonate well with the tech-savvy Gen Y shopper, but do they make the shopping experience more convenient?
Picture the scene: Mom has 20 minutes to spare on the way to pick up the kids from school, so by the time she’s found a parking spot, she has 10 minutes (at best) left to walk into the store, find what she is looking for, pay for it, and get out again without risking being late. Does she have any chance of meeting her SLA? Probably not, unless she knows exactly what aisle the product(s) she needs is in, whether the product(s) is in stock, and whether the checkout lines are empty.
Since the 1970’s, retail stores have slowly undergone a digital evolution. POS systems replaced cash registers, credit cards became the payment norm, and security tags reminded shoppers to pay. Despite these changes, the fundamentals of the customer shopping experience remained unchanged: We still pick up products, ponder a decision, and either leave empty-handed or wait in line to pay.
However, in the digitally connected store of 2012, big changes are underway. Fixed checkout aisles and cash registers are being replaced by smartphone-wielding store associates who now take the checkout to the customer. Furthermore, the smartphone generation performs self-assisted checkouts directly from their phones while sleek new in-store touch-screens allow them to experience products without opening the box or removing the coat hanger.
The technologies being adopted. Retailers such as Lowe’s, Gap, Nordstrom, Macy’s, and Sears are rolling out smartphones and tablets to their store associates and investing in next-generation interactive displays and kiosks. Certain solutions are starting to prevail across retailers.
The empowerment of the sales associate. Armed with smartphones and tablets, empowered sales associates are helping customers on the shop floor as well as busting checkout queues with mobile POS.
For the next 2 minutes as you read this blog post, please try to forget about Apple the product company and instead focus on Apple the retailer. Two years ago, Apple undertook a worldwide roll out of iPod Touches to its store associates. These devices came wrapped in a sled adding a 2D bar code scanner and credit card swipe capabilities to the hardware lineup and enabled store associates to perform mobile POS transactions anywhere in the store. Ever since the retail industry has been playing catch-up with retailers like Lowes, Gap, and Home Depot recently following suit with respective rollouts of mobile POS functionality to their store associates.
Today Apple raised the bar. Customers in the US can now use their own iPhone 4 or 4S in conjunction with the Apple Store app (one of my favorite mobile shopping experiences and complete with a fresh update) to scan the bar code of most in-store products and perform a self-checkout. The feature, called EasyPay uses the iPhone’s rear-facing camera to scan a product bar code with payment occurring via a simple authentication to iTunes, just like any other in-app purchase. The core difference is that Apple is now allowing in-app purchases of physical merchandise, albeit restricted to Apple at this time. Once payment is complete, the customer simply strolls out of the shop showing their digital EasyPay receipt to a member of staff as they exit. Time will tell if EasyPay results in any increase of in-store fraud for Apple, but for the consumer that knows what they want the convenience of EasyPay is crystal clear.